online buying

To ensure the success in online business, it is important for retail businesses to understand their target customers. The previous studies about online business stated that customers will have different attitudes and different behaviors to online sales. This research has two main objectives.

TABLE OF CONTENTS

Contents

TABLE OF CONTENTS………

ACKNOWLEDGEMENT………

ABSTRACT………

CHAPTER 1: INTRODUCTION ………

1.1. Background and rationale ……….…

1.2. Definitions of terms……….……

1.3. Scope of the study ……….………

1.4. Literature review ……… ……

CHAPTER 2: METHODOLOGY ……… ………

2.1 Research design……….……….……

2.2 Subjects of the research ………

2.3 Research questions ……… …….…

2.4 Method of collecting data ……….…………

CHAPTER 3: FINDINGS AND ANALYSIS……… …………

3.1 Findings ………

3.2 Analysis ……….………

CHAPTER 4: CONCLUSION AND RECOMMENDATION………

4.1 Conclusion ………

4.2 Recommendation………

BIBLIOGRAPHY……… …………

APPENDICES………

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4 5 6 6 8 8 9 9 11 13 13 23 29 29 30 31 32

In the process of writing this research, we have incurred many debts of gratitude

We would like to thank all the survey participants for their support in answering the

interviews, surveys and free short talks Without them, we could not collect the useful data, reach and understand profoundly this topic

A lot of thanks are also sent to our instructor, Ms Tran Thi Thu Trang, the lecturer of

Faculty of Foreign Languages, National Economics University, for her beautiful lectures, advices and enthusiastic supports She inspires us the love with English and writing as well as helps us improve skills in report writing – one of the most important skills for the jobs in future

The last thanks are for my dear friends who share with us many interesting ideas and suggestion and for all the readers who spend their precious time to read and give comments to this research

A great love for all,

Dao Trong Truong

To ensure the success in online business, it is important for retail businesses to understandtheir target customers The previous studies about online business stated that customers will havedifferent attitudes and different behaviors to online sales This research has two mainobjectives First, this research is considered the importance of customer attitudes toward onlineshopping Second is also considered two main trends of online shopping that are buying commongoods and special ones Based on previous researches and based on a survey group of 137 studentsworking and living in Hanoi, who were randomly selected All studies have found significantresults in terms of the attitude of customers toward online shopping as well as the differencesbetween customers in the two trends in terms of time, convenience, and customer service and pricefactors toward online shopping

CHAPTER 1 INTRODUCTION

1.1 Background of the research

Nowadays, the rapid development of science and technology, especially the booming ofinformation technology and the Internet in recent years has helped people remove the barriers oftime, distance For a business, Internet is an indispensable means in each of their business plan,marketing plan, it is also an effective means in dealing with customers in the globalmarket According ACNielsen, there are more than 627 million people in the worldwide onlineshopping (ACNielsen, 2007) The studies of Rester (2008) are also predicted that by 2010, the totalsales of electronic commerce will reach $ 316 billion, account for 13% of the total retail sales

A study of GSO Vietnam (General Statistic of Vietnam) indicated that the future of onlineshopping in Vietnam looks promising and bright Vietnam is in the transition of the application ofinformation technology and Internet in all areas According to statistics of the GSO Vietnam, in

2008, 23% of the Vietnamese population using the Internet and this number is increasingrapidly This development created a huge opportunity for Vietnam retailers to develop businessbased on online shopping

According to GSO Vietnam, the number of Internet users purchase online via the Internet onlyapproximately 8.2% Of these, the majority of people shopping online are relatively young, higheducated or high social status Moreover, a study of online shopping website (www.ttvnol.vn)states that shopping online is quite popular in Vietnam, in which 37% of online shoppers buyclothes, shoes and other personal items; 22% buy the DVD, CD or films; 21 % interest in mobilephones, computers; 20% remaining interest in the other items (Report from www ttvnol.vn, 2008)

However, considering shopping online in Vietnam, it is still in development stage This

perception, the attitudes of customers will be formed to make a purchase decision Thus, theattitude of the customer impacts strongly to their purchase decisions.

Besides, the consideration to trends of customers in shopping online also helped retailbusinesses consolidate their business strategies There are many online shopping trends, however,this study just reviewed two trends of retail shopping, based on the products that customerstypically purchase From that, I divide the two types of customers which are: the normal-productcustomers that purchase normal goods and the special-product customers that purchases specialgoods Based on the division of two shopping trends, the research will analyzes additional factorssuch as time, price, and convenience, etc to clarify the distinction between two types ofcustomers

1.2 Definitions of terms

Electronic commerce (E-commercial): According to www.wikipedia.com, E-commercialshall be interpreted in many different definitions However, considering the scope of research,electronic commerce in the strict sense is understood that the purchase of goods and servicesthrough electronic means, especially through Internet and other networks According to the World

Trade Organization, WTO, "Electronic commerce includes the production, advertising, sales and distribution of products sold and the payment on the Internet, but assigned to receive a tangible way, both products as well as delivery of digital information via the Internet.”

Web shops: The term 'web shop' has a number of meanings An online retailer may be called

a 'web shop' Web development, hosting and other web-related activities can be called 'web shops.'Buying online grew because, over time, transportation costs went up and telecom costs went downand access to the Internet became commonplace Online shopping offers a larger selection of goodsand services and thus greater choice at optimal prices The problems with online shopping are thatyou cannot smell, touch, taste or try what you are buying

Normal goods: In the economic sense, normal goods are realized when demand increases

income increases, all other things being equal However, as considered within the scope of theresearch, normal goods usually refers to goods and items needed in the daily life such as personalitems, electronic products necessary for the life and work

Special goods: In the scope of the research, special goods are the products that are unique or

hard to find in the outside market For example: the ancient watch or camera, some hand-madeproducts, etc

1.3 Scope of the research

The location of the research is concentrated in Hanoi Hanoi is the capital and the center ofeconomics, politics, and culture of Vietnam With the population of more than 11 million people(2009), Hanoi is considered a huge market of diversified class of customers and the destination for

a lot of manufacturers and distributors People here can access from tiny wet markets to splendorcommercial centers, along with approaching various types of marketing and advertisementeverywhere and every day In addition, the GDP of more than US$1500/capita in Hanoi make thismarket advantageous to test the shopping behavior

This research is conducted in the nearest 3 years from 2007-2010 – the booming period ofonline shopping in Vietnam Also, data were also obtained from the survey results as done on agroup of randomly chosen students from many universities in Hanoi Thus, the results of thisresearch are objective and applicable

1.4 Literature review

• In terms of consumers’ online buying behavior:

Some researchers have conducted their researches in their efforts to consider the online buyingbehavior of consumers For example, Bellman et al (1999) investigated different ways to predictwhether an individual will purchase online The authors concluded that demographic variablessuch as income, education and age, have a modest impact on the decision of buying online, whileother important determinants of purchase previous online shopping behavior, as previous onlinepurchase This is consistent with Forrester Research that has demonstrated the demographic factors

do not have a high impact on technology as consumers’ attitude (Modahl, 2000) Kotler andArmstrong (2000) pointed out that the buying choice influence more by four importantpsychological factors: motivation, perception, learning and beliefs and attitudes Steinfield andWhitten (1999) suggested that the combination of the Internet combined with physical presence,providing more opportunities to capture more business than online presence only, since they can

consumer trust in online stores However, it is worth mentioning that beliefs and attitudes that arefound in the stage prior to the adoption of e-commerce are different to those in the “post-adoption”stage (Gefen et al, 2003; Venkatesh and Brown, 2001; Yu et al, 2005)

• In terms of the factors affect to customer’s purchase decision

Concerning factors that affect online shopping, Ernst and Young (2000) reports that Internetusers bought online by choosing a good product, competitive price, and easy to use, but wasconcerned about transportation costs, lack of opportunity to test before the product, as well as, theconfidentiality of credit card and personal information Know and Lee (2003) to explore thatconsumers’ concerns about the payment security and its relationship to online shopping attitudesand actual purchase They observed a relationship between negative attitudes to online shoppingand concerns about online payment security Consumers with a positive attitude seemed lessconcerned about payment security Similarly, popular literature cited the shopping comparisonsuch as low price, timely delivery, convenience, saving time, lower shipping costs, customerservice improved, tax-exempt status e-mail and respond quickly, as the primary reasons for theincrease in online shopping (Lorek, 2003; Magee, 2003; Maloy, 2003; Retail Merchandiser, 2003)

In additions, Karayanni (2003) observed that online shopping tends to avoid the availability ofshopping on the basis of 24 hours and time efficient A study conducted by Monsuwe et al (2004)provide the general reviews of all relevant literature on the factors driving consumers to shoponline Furthermore, this research also includes the reviews of literature on the advantages,difficulties and expectations of consumers shopping online, and considers the perceptions ofadopters of online shopping compared to Internet users who prefer the traditional way of shopping

CHAPTER 2 METHODOLOGY

2.1 Research design

The original purpose of this research is to assess the attitudes of customers toward theshopping online way Also, it is to identify the main purchasing trends of customers involved inonline shopping Therefore, the following six hypotheses are reviewed and examined through theentire process of the research to find out what hypotheses can be accepted or rejected

By definitions, the qualitative research approach fits the most with descriptive studies in order

to quantify data that are immeasurable, such as feelings, beliefs, and thoughts A qualitativeresearch includes examining and reflecting on perceptions in order to gain an understanding ofsocial and human psychological behavior This study employs qualitative research method, sinceits aim is to find and build theories that can explain the relationship among different variablesthrough qualitative elements They do not have standard measurements; instead, they arebehaviors, attitudes, opinions, and beliefs Thus, the goals of qualitative research are primarily toadvance new theories, to interpret individual events’ significance and to give voice to particulargroups

In addition, the quantitative research method is also compatible with the study because itallows researchers to conduct the research problem in specific and set terms Besides, quantitativeresearch method also distinctively specifies both the independent and the dependent variablesunder the investigation This study applies experimental research design The above literature partmentions some previous researches whose topic is as nearly as our topic After many years, thoseprevious results may not be accurate and appropriate for every day - changing economy Therefore,

we set up hypotheses based on previous researches and conduct the survey to retest thosehypotheses

2.2 Subjects of the research

2.2.1 Data

In Vietnam, online shopping is a very new field, and in particular, it is often applied to thetarget customers that are young, highly educated and easy to access to the Internet Therefore, thisresearch is intended to focus on students in several universities in Hanoi such as NationalEconomics University, Hanoi University of Technology or Vietnam National University, etc Thismethod makes the collected data more accurate and useful

2.3 Research Questions

• Customers' attitudes toward online shopping:

1. How do customers think about the substitution of online shopping methods to thetraditional shopping methods?

2. How do the customers think about the retailer trademark in shopping online?

• Online Shopping Trends:

3. Which type of customers in the two types is affected more by the time factors?

4. Which type of customers in the two types is affected more by the conveniencefactors?

5. Which type of customers in the two types is affected more by the price factors?

6. Which type of customers in the two types is affected more by the customer servicefactors?

The following table shows the variables measured in specific hypotheses along with their datatypes These hypotheses correspond to the above research questions:

the online shopping method to the traditional shopping method

Multiple Choice

From Q3 to Q7H1 The retailer trademark is not

important in shopping online field

Multiple ChoiceFree responseH3 The normal-product customers

are affected more by the time factorthan the special-product customers

Multiple Choice

Ranking

Free response

From Q 7 toQ13

H4 The normal-product customers

are affected more by the convenience factor than the special-product customers

Multiple Choice

Ranking

Free responseH5 The normal-product customers

are affected more by the price factor than the special-product customers

Multiple Choice

Ranking Free responseH6 The normal-product customers

are affected more by the customer service factor than the special-product customers

Multiple Choice

Ranking

Free response

The questions were categorized to prove the hypotheses taken up for the research Followingmeasurement scales were used in making the survey This survey with 13 questions has 2 mainparts which are the individual information part (2 questions) and the investigated issues part (11main questions) The survey is attached in the appendix

• Multiple choice—single & multiple responses

• Ranking Scale

• Free Response

2.4 Method of collecting data

In this method of data collection, it is the responsibility of the researchers to question thesubjects and record the respondents’ response by personal or impersonal means so that the datacould be used as a basis for testing the hypothesis by using various statistical tools

In this research, I use two main sources of data including: primary source and secondarysource In the primary sources, there are two methods of collecting data: online survey andinterview The sample size of the primary source for online surveys is expected 120 students thathave the budget over 1 million per month

2.4.1 Primary sources

2.4.1.1 Online surveys

Create online questionnaire on the Internet is a simple way that can collect the necessaryinformation at low cost Besides, this method also helps researchers save time for the same time;the survey can be completed by more people (compared with the data collection methods such asinterviews ) This kind of collecting data is known as online surveys and nowadays, it’sbecoming more and more popular all over the world Due to those purposes, the online survey wascreated at the following link http://freeonlinesurveys.com/rendersurvey.asp?sid=8i94hwyt9eak0fm763686 Through this survey, more than 120 responses of students indifferent universities in Hanoi were sent back and allow researchers creating a large amount of datafor analysis to serve researching purposes

2.4.1.2 Interview

Through this way of collecting data, researchers can have the more accurate information Thedirect interaction between the interviewer and interviewee will make all the questions andproblems easier to understand Moreover, the sensitive questions in this field will also be addressedthrough the interview The process of choosing interviewees is carried out randomly by personalapproach I have interviewed about 20 students from University of National Economy as thosewho are potential customers I also interviewed three directors of the companies and onlineshopping website host specializing in online business which are Vietapps Company, ttvnol.vnwebsite and enbac.vn website.

CHAPTER 3 FINDING AND ANALYSIS3.1. Findings

After the survey was delivered to the shoppers, we collected 137 responses The questionnaire isshown in the appendices

3.1.1 Customers' attitudes toward online shopping:

H1 - Customers tend to substitute the online shopping method to the traditional shopping method.

To test this hypothesis, the shoppers are asked 2 questions which are Q4 and Q5 The questionswere designed to figure out whether the traditional trading way can be substituted by the onlineshopping way

Q4: Do you think that the shopping online can be substituted the traditional trading?

More than 70% of the students asked believes that shopping online can substitute the most thetraditional trading (it can substitute 30-60% the traditional trading method) The number ofstudents launches the extreme points of view with total yes or no covers small percentages of over8% and 4% There is over 15% of student’s state that online shopping just substitute a part of thetraditional trading method The remaining account for over 2% is the “not sure” ones.

Q5: How often do you joining online shopping?

There is over 43% of student respondents stated they regularly use online shopping method 89% of the shopping time is done online.) In contrast, only 3% of students never go shoppingonline There is more than 15% of students use only the online shopping method This figure isgreater than the number that roughly 13% said they rarely shop online

(50-H2 - The retailer trademark is not important in shopping online field.

Q6: What do you think about the brand issues in shopping online?

The largest part, over 30% of student respondents stated that brand is sometimes necessary,sometimes not Besides, there are more than 26% and 16% of the students point out that the brand

is important and extremely important in the online business In contrast, approximately 19% ofstudents stated the brand is not really necessary and over 8% said that they do not care about brandissues when shopping online

 Through these figures, we can see that customers expressed an open way towardonline selling This is a new method; it has many advantages compared to traditionalsales methods These figures show that university students tend to replace thetraditional way by online purchasing methods; they spend lots of time for shopping inthis way Moreover, within the scope of the research, brand here is only evaluated bythe credibility of the online business, not considering the products brand Moreover,the results are quite similar to the survey results of the traditional shopping methods.However, in comparison with the traditional sales methods, the retail business or thenew company has more opportunities in the field of online business

I can see that customers expressed very positive attitudes to the online shopping.Although there is a part of customers incompletely support this way of selling or justconsider it an alternative of the traditional sales methods, the number of customersaccount for only a small portion of total customers Furthermore, it is also found thatthe opportunities for retail businesses and new companies in the field of onlinebusiness are quite a lot

3.1.2 Online Shopping Trends:

Q7: What are the main reasons that let you join in shopping online? (5 is the most important,

1 is the least important)

In column 5 points, over 60% of student respondents said that they join online selling because theyfind like the product In column 4 points, more than 43% of students stated that saving time is a2nd important factor after the product criterion In column 3 points, more than 43% of studentssaid that the convenience factor is 3nd important The two remaining factors of price and customer

Q8: What kinds of products you want to buy online?

There is over 78% of students join online selling to buy normal products The rest involved inonline selling to purchase these unique products

For the normal goods:

Up to 88% of students choose the items such as clothing and personal items, also, 67% choose the computer products and electronics items There are 43% and 37% of students who chosen normal good select cosmetics and toys

Q9: What do you think about the quality of the product sold online?

We can see the average evaluation of normal consumer for the quality of the online product is better than special-product customers’ More than 38% of normal-product customers evaluate the product’s quality on “good” while only 28% of special-product customers evaluate “good “ on theproduct’s quality Similarly, 15% of normal-product customers access product’s quality at the highest level, while just only 10% of special-product customers evaluate "very good" for quality ofonline products

 Through these figures, we can easily identify two main trends of customers when they engage in online shopping First is the trend of buying normal goods, second is the trends of buying the special goods The two types of customers have the different views about the quality of the products While the normal-product customers seem to

evaluate the online products’ quality better than the special-product customers

H3 - The normal-product customers are affected more by the time factor than the product customers.

special-Q14 and Q18: How long can you wait for the product after the purchase?

For the normal-product customers

For the special-product customers

We can see the different opinions in terms of time factor between the two types of customers While normal-product customers tend to wait shorter for the products they buy Approximately 81% of normal-product customers are willing to wait 1 to 2 days for their product, 12% of normal-product customers expect to receive their goods immediately, while no one wants to wait more than a week for their products In contrast, over 60% of customers are willing to wait for special products they purchase in a week and more than 21% is willing to wait for more than a week.

 This shows that with the normal products, customers are easy to access to shops andtake the items, which are because online shopping can be replaced by traditionalshopping However, for the special products, these products are often very difficult tobuy outside Thus, special-product customers buying these products online tend to bewilling to wait longer (they can wait for more than one week to receive their products)

H4 - The normal-product customers are affected more by the convenience factor than the special-product customers.

Q12 and Q16: Can you rank the factors of convenience? (1 for the most important, 3 for the least important)

a You can list information about the products that you need

b Shipping methods do you find it favorite?

We can see for the normal-product customers, 42% and 44% of them stated that the distance andshopping method are two criteria in the convenience factors they are interested in In contrast, 42%

of special-product customers want to know about the detail information of the products, 33% ofthem care about the distance and just 15% of them are interested in shipping methods

For the shipping methods, we can see more clearly as the following: